EXECUTIVE SUMMARY

INTRODUCTION :
PepsiCo aspires to be the world’s premier consumer products company dedicated to beverages
and foods. Through innovation, understanding, and solid ethics, PepsiCo (PepsiCo, 2012) strives
to improve the lives of consumers, business partners, and employees. Aquafina Flavor Splash
Travel Pack extends company’s core goals. It has new ingredients and formulas to satisfy
consumer needs without lessening commitments to quality and health. As such, this new
product will drive shareholder value. ANALYSIS/METHODOLOGY PepsiCo has a large portfolio of
multiple billion-dollar brands, including Aquafina. Through careful market research,
prototyping, and pricing, it can successfully extend the FlavorSplash product line. The new
Aquafina FlavorSplash Travel Package fits well within PepsiCo’s commitment to innovative,
convenient, responsible products. The FlavorSplash travel pack gives busy customers a healthy
and easy alternative to drinking traditional beverages. Water is a high-growth space in the
beverage industry. The newer sweetener stevia is part of PepsiCo’s innovative efforts to
sweeten beverage without adding unnecessary sugars. Every section of the marketing channel
can work successfully together to bring this product to market: PepsiCo, OfferPop, Pepsi
Bottling Ventures, and retailers. PepsiCo has solid manufacturing and distribution channels with
Pepsi Bottling Ventures to develop and bring the new product directly to stores. Innovative and
creative print and web promotions will carry the message of the new product to a wide
audience. Excellent pricing strategies of market penetration and everyday low pricing perfectly
position the new product.

COMPANY NAME :
The name is the Pepsi-Cola Company, also known as PepsiCo.

MISSION AND VISION STATEMENT:

The mission and vision of the Pepsi-Cola Company is available on their website1 and included
as a whole. “At PepsiCo, we believe being a responsible corporate citizen is not only the right
thing to do, but the right thing to do for our business. Our mission is to be the world's premier
consumer products company focused on convenient foods and beverages. We seek to produce
financial rewards to investors as we provide opportunities for growth and enrichment to our
employees, our business partners and the communities in which we operate. And in everything
we do, we strive for honesty, fairness and integrity.

OUR VISION :
Our vision is put into action through programs and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making PepsiCo a
truly sustainable company.
PERFORMANCE WITH PURPOSE:
At PepsiCo, we're committed to achieving business and financial success while leaving a
positive imprint on society - delivering what we call Performance with Purpose. Our approach
to superior financial performance is straightforward - drive shareholder value. By addressing
social and environmental issues, we also deliver on our purpose agenda, which consists of
human, environmental, and talent sustainability.

PEPSICO VALUES & PHILOSOPHY:

Our Values & Philosophy are a reflection of the socially and environmentally responsible
company we aspire to be. They are the foundation for every business decision we make.

OUR COMMITMENT:
We are committed to delivering sustained growth through empowered people acting
responsibly and building trust.

WHAT IT MEANS:
SUSTAINED GROWTH :
Sustained growth is fundamental to motivating and measuring our success. Our quest for
sustained growth stimulates innovation, places a value on results, and helps us understand
whether today's actions will contribute to our future. It is about the growth of people and
company performance. It prioritizes both making a difference and getting things done.
EMPOWERED PEOPLE:
Empowered people means we have the freedom to act and think in ways that we feel will get
the job done, while adhering to processes that ensure proper governance and being mindful of
company needs beyond our own.
RESPONSIBILITY AND TRUST:
Responsibility and trust form the foundation for healthy growth. We hold ourselves both
personally and corporately accountable for everything we do. We must earn the confidence
others place in us as individuals and as a company. By acting as good stewards of the resources
entrusted to us, we strengthen that trust by walking the talk and following through on our
commitment to succeeding together.

GUIDING PRINCIPLES :
We uphold our commitment with six guiding principles. We must always strive to:
CARE FOR OUR CUSTOMERS”,
OUR CONSUMERS AND THE WORLD WE LIVE IN.
We are driven by the intense, competitive spirit of the marketplace, but we direct this spirit
toward solutions that benefit both our company and our constituents. Our success depends on
a thorough understanding of our customers, consumers and communities. To foster this spirit
of generosity, we go the extra mile to show we care.
SELL ONLY PRODUCTS WE CAN BE PROUD OF.:
The true test of our standards is our own ability to consume and personally endorse the
products we sell. Without reservation. Our confidence helps ensure the quality of our products,
from the moment we purchase ingredients to the moment it reaches the consumer's hand.
SPEAK WITH TRUTH AND CANDOR”
. We tell the whole story, not just what's convenient to our individual goals. In addition to being
clear, honest and accurate, we are responsible for ensuring our communications are
understood.
WI N WITH DIVERSITY AND INCLUSION:.
We embrace people with diverse backgrounds, traits and ways of thinking. Our diversity brings
new perspectives into the workplace and encourages innovation, as well as the ability to
identify new market opportunities.
BALANCE SHORT TERM AND LONG TERM:.
In every decision, we weigh both short-term and long-term risks and benefits. Maintaining this
balance helps sustain our growth and ensures our ideas and solutions are relevant both now
and in the future. RESPECT OTHERS AND SUCCEED TOGETHER. :
Our mutual success depends on mutual respect, inside and outside the company. It requires
people who are capable of working together as part of a team or informal collaboration. While
our company is built on individual excellence, we also recognize the importance and value of
teamwork in turning our goals into accomplishments.”

COMPANY DESCRIPTION
SUMMARY :
PepsiCo is a major food and beverage company that makes, markets, and sells $29 billion drinks
and food to over 200 countries around the world, Its products are sold under at least 22 major
brands that total $1 billion each in sales annually3,5. The company is split into several strategic
business units based on geography: PepsiCo Americas Beverages, PepsiCo Americas Foods,
PepsiCo Europe, and PepsiCo Asia, Middle East & Africa . PepsiCo, Inc is located in Purchase, NY
and PepsiCo Americas is located in Sommers, NY. Their prominent brands in the United States
include Pepsi, Gatorade, and Aquafina. This also includes partnerships with Starbucks in 1991
and Lipton in 1994 to sell ready-to-drink (RTD) beverages in stores. These beverages refresh
people at work, school, exercise, and relaxation. PRODUCT LINE DESCRIPTION:
PepsiCo product lines are delineated by Beverage World in its State of the Market 2013 report .
t offers energy drinks, RTD coffee, bottled water, RTD tea, sports drinks, value-added water,
carbonated soda drinks, and fruit beverages. For clarification, value-added water has additional
flavors and ingredients that bottled water does not include. KEYS TO SUCCESS The 22 billion-
dollar brands are largely the collective sustainable competitive advantage of PepsiCo. These
brands are diverse and serve many different markets with many different concerns, such as
refreshment and nutrition. As an example, PepsiCo developed a drink to meet these customer
concerns in 2012 . Pepsi NEXT is a low-calorie alternative to their regular brand. It generated
$100 million in retail sales in its first year. This new product didn’t replace regular Pepsi soda,
perhaps considering the unsuccessful launch of New Coke by The Coca-Cola Company in 1985 .
These efforts keep these brands favorably in the public eye. PepsiCo also benefits by having
their concentrate and major bottlers as one business . Many carbonated-beverage companies
make concentrate and sell it to bottlers. These bottlers add liquid, bottle, and distribute
beverages to stores . While this partnership is often successful with major beverage companies,
it is open to disagreements between the businesses and redundancies with multiple bottling
locations. PepsiCo merged with Pepsi Bottling Group and PepsiAmericas to consolidate
manufacturing, reduce costs, and bring products more quickly to market.
GENERAL HISTORY OF PEPSICO:
PepsiCo started with Caleb Bradham in 189816. The pharmacist created Pepsi by trying
different combinations of waters, syrups, and juices and sold it by soda fountain in his store. He
patented his formula and started the Pepsi-Cola Company franchise in 1902. Bradham sold
syrup to bottler franchises, and there were franchises in 24 states by 1910. The company also
marketed strongly by designing an attention-grabbing company headquarters. Fluctuating
commodity prices hit the company hard during World War 1, and it was forced into bankruptcy
in 1923 and sold to a string of companies16. Upon its second bankruptcy in 1931, it was bought
by Charles G. Guth who revised the business with lessons learned from The CocaCola Company.
Sales grew by nickel bottles and the company survived the Great Depression. When World War
2 came, Pepsi stabilized its commodities by buying a sugar plantation in Cuba. It also aligned its
brand with American patriotism. Pepsi expanded its business nationally and internationally
after World War 216. It used stars like Joan Crawford to tie its products to concerns of baby
boomers: social life, refreshment, style and health. 1964 saw the introduction of Diet Pepsi and
the purchase of Mountain Dew. 1965 saw full-scale commercial distribution. Pepsi-Cola and
Frito-Lay merged to create PepsiCo, Inc. in 196516. Pepsi spent the 1970s directly challenging
The Coca-Cola Company with an advertising campaign16. Titled “The Pepsi Challenge,”
customers were asked to blindly sample two liquids and choose the best. Pepsi considered
Coca-Cola’s unsuccessful introduction of New Coke as a victory. Stars continued to endorse the
brand into today with Sofia Vergara. Pepsi developed its range of products in the last two
decades. It partnered with Lipton, Tropicana and Starbucks in the 1990s to bring RTD coffees
and teas to stores. It also developed new flavors like Sierra Mist, Mountain Dew LiveWire, and
Pepsi ONE. It also merged with SoBe, Gatorade, and Quaker Oats and offered Dole juices.
COMPANY PRODUCT OFFERING:
PepsiCo product lines are energy drinks, RTD coffee, bottled water, RTD tea, sports drinks,
valueadded water, carbonated soda drinks, and fruit beverages. Sales and growth figures are
given when available from the State of the Market 2013 report from Beverage World. The
energy drinks include AMP Energy ($184 million in sales, 3% in 2012 ), Amp Boost ($64.7 million
in 20126 ), and No Fear Energy Drinks Carbonated soda drinks include Citrus Blast, Diet Pepsi,
Diet Mountain Dew, Diet Sierra Mist, Manzanita Sol, Mirinda, Mountain Dew, Mug Soft Drinks,
Pepsi, Pepsi MAX, Pepsi NEXT, and Sierra Mist Natural. The best-selling brands in this category
are listed in the table above from Beverage World’s State of the Market 2013 report. Compared
with tables below from the same report, Pepsi Cola brand compares favorably with its major
brand competition: Coca-Cola Classic, Diet Coke, and Dr Pepper. RTD coffees include Seattle’s
Best Coffee ($4.4 million and -81.5% growth in 2012 ), Starbucks DoubleShot ($342.3 million
and 18.6% growth in 20126 ), Starbucks Frappuccino ($714.1 million and 9.3% growth in
20126 ), and Starbucks Iced Coffee. Bottled water includes Aquafina ($896 million and 3.6%
growth in 2012). Value-added water includes Aquafina FlavorSplash, Propel Zero, Propel Zero
Powder, and SoBe Lifewater. RTD tea includes Brisk ($308 million and -4.6% growth in 2012 ),
Lipton Iced Tea ($370.6 million and -5% growth in 20126 ), Lipton PureLeaf ($167.9 million and
6.5% growth in 20126 ), SoBe Tea ($15.1 million and -18.1% growth in 20126 ), and Tazo Tea
($14.3 million and 201.2% growth in 20126 ). Sports drinks include Gatorade G Series Energy
Chews, Gatorade G Series Prime 01($2765.4 million and 1.3% growth in 20126 for the whole G
Series), Thirst Quencher – G Series Perform 02, Gatorade G Series Recover 03, Gatorade G
Series Recovery Shake, Gatorade G2 ($143.9 million and 10.2% growth in 20126 ), Gatorade
Natural, Gatorade G2 Natural, Gatorade G Series PRO Carb Energy Chews, Gatorade G Series
PRO Prime 01, Gatorade G Series PRO 02 Endurance Formula, Gatorade G Series PRO 02
Perform Gatorlytes, and Starbucks Refreshers ($42.9 million and 12,060.5% growth in 20126 ).
Geralds Fruit beverages include Dole Plus Fortified Juices & Sensation Juice Drinks ($17.7 million
and 48.7% growth in 2012 ), IZZE Sparkling Juice, Ocean Spray Juice/Juice Drinks, Naked Juice,
Naked Juice Coconut Water, SoBe Juice Drinks, SoBe Lean Diet Juice Drink, Tropicana
Farmstand, Tropicana Trop50 Beverages, Tropicana Pure Premium Juices ($1035.2 million and
-1.2% growth in 20126 ), and Tropicana Tropics. PepsiCo also offers yogurt that include Muller
Corner by Muller Quaker Dairy, Muller Greek Corner by Muller Quaker Dairy, and Muller FrutUp
by Muller Quaker Dairy. SECONDARY MARKETING RESEARCH:
TOP FIVE BEVERAGE COMPETITORS The top five beverage competitors of PepsiCo are The
Coca-Cola Company, Dr Pepper Snapple Group, Cott Corporation, National Beverage including
Shasta and Faygo brands, and Big Red . The charts below in this section are taken from
Beverage World’s State of the Market
INDUSTRY ANALYSIS:
INDUSTRY BACKGROUND AND OVERVIEW:
Liquid refreshment beverage industry sold 29,837.3 million gallons in 2012 . It provides more
than 233,000 jobs and has an economic impact of $141.22 billion in the United States29.
Carbonated beverages take the largest share at 44.7%, bottled water at 32.4%, and fruit
beverages at 11.1%. The industry has not recovered from the recession in terms of volume and
growth. This marketing plan focuses on nonalcoholic brands.
MARKET NEEDS:
Markets like to keep the original formulas of drinks. As discussed previously, The Coca-Cola
Company replaced its classic formula with New Coke and it flopped . They publicly apologized
and showed their weakness in business strategy. Markets need the industry to develop
nutritional drinks to address obesity and wellness concerns. Gary Hemphill of Beverage
Marketing Corporation says it best, “Our gut feeling is that generally speaking if people can
choose between no calories and some calories, they’re going to choose no calories” . This
concern crosses product lines, and is especially important for parents choosing fruit drinks for
their children. People are also interested digestive health and lowering cholesterol. According
to Pam Stauffer of Cargill Health and Nutrition, plant sterols and barley fiber are cleared by the
FDA and reduce LDL cholesterol. Markets want energy boosts that do not negatively affect their
health. The Food and Drug Administration (FDA) is pushing companies to clearly state the levels
of ingredients like caffeine Geralds in its drinks . These drinks can dehydrate the body, which is
a potential danger with heavy exercise. They can also hide how drunk a person really is by
keeping them more awake and stimulated, but not coordinated or fully functioning. As an
example, college students were hospitalized after drinking Four Loko with alcohol. The Federal
Trade Commission (FTC) brought a deceptive marketing claim against Four Loko, and now cans
must have alcohol facts like nutritional facts. The cans must also be resealable so people do not
consume the whole beverage at one time. More recent concerns come from the Substance
Abuse and Mental Health Services Administration. Their recent hospital survey found many
patients drank energy beverages and then had heart attacks and related conditions. Given the
unreliability of self-reporting, they were likely taken with other substances like alcohol. The FDA
is researching these effects. Other substances like brominated vegetable oil are tied to negative
health effects. It is linked to short and long-term neurological damage and disorders. A young
woman brought an online petition against PepsiCo to BVO from Gatorade, and they did in early
2013. However they did not remove it from Mountain Dew. Markets want to drink bottled
water without plastics damage themselves or environment. Bisphenol A (BPA) is an industrial
chemical used to make plastics and resins. These are often found in water bottles and other
food and beverage containers. According to Katherine Zeratsky, R.D., L.D., BPA can damage
brains and prostates of fetuses, infants, and children at certain levels. The FDA approved BPA at
low levels, and they continue to research BPA. The plastics also contain polyethylene
terephthalate (PET) that releases toxins as it breaks apart in landfills and oceans. Many
consumers now carry their own BPA-free bottles of water in response to these concerns.
Markets also want a refreshing drink, treat to pamper themselves, or for nostalgia. A wide
variety of beverages are usually available at restaurants, amusement parks, and other
recreational outlets. Consumers often link beverages positively with their childhood . The colors
and flavors of beverages attract different demographics. Children like bright colors and flavors
of candy, whereas their parents want labels of nature and real fruit. Men like citrus flavors, and
women like similar floral flavors. The colors and flavors are in a balance with ingredients and
their individual health benefits and drawbacks.
KEY SUCCESS FACTORS IN INDUSTRY :
• Develop and maintain well-known brands.
• Develop and consolidate syrup manufacturers and bottlers.
• Offer a range of well-maintained brands in different product lines.
• Be health conscious, but also be mindful of backing up health claims.
• Be health conscious and consider negative effects on stockholders.
SIGNIFICANT TRENDS AND MARKET GROWTH OPPORTUNITIES :
Growth will come from providing health-conscious snacks to people without much time or
money to spare. They may also lack time and budge for restaurants, but they could grab a
healthy, filling snack on their way. Michael Bellas and Gary Hemphill of Beverage Marketing
Group think that future drinks will fit custom needs of smaller markets, rather than beverage.
Geralds standards . New product categories and combinations of current products could lead to
new products. PepsiCo has a strong interest in snackifying beverages, such as Gatorade Chews
and Tropolis, a grab-and-go fruit puree for children. It also recently purchased a Russian dairy
maker to provide smoothies and yogurts. Beverage World’s State of the Market 2013 report
does not list either new product lines of smoothies or liquid flavor enhancers . Liquid flavor
enhancers are another grab-and-go solution for environmentally-conscious people. People
carry their own bottles and still have refreshing drinks with and without calories, caffeine, and
performance enhancers. Kraft, Nestle's Nestea, Coca-Cola, Great Value, Supervalu, WinnDixie,
HyVee, and others all offer liquid flavor enhancers33. Kraft was the first to the market with Mio
in 2011. The portable zero-calorie syrups gained 12.28% of the fruit-drink mixes market in
201228. A $24.7 million marketing campaign posted information to millennials on Facebook
and other social media. After waiting a year after Mio's launch, Coca-Cola launched their new
product Dasani Drops and Powerade Zero Drops. CocaCola benefits from Kraft's customer
education and seeing the viability of their new product. Later they released MiO Energy, Crystal
Light Liquids, and recently MiO Fit at the superbowl. Jason Chong of Bev Review opines that
Kraft is trying to saturate the overall market with its brands. There are still signs of growth in
this new product line of flavor enhancers. Concentrates can be as diverse as RTD beverages and
may aid those sales. For example, Nestle will launch its own Nestea Liquid Water Enhancer soon
at Target stores in 2013. It will have Iced Tea with Lemon, Iced Tea with Peach, and Half & Half
Iced Tea, and Green Tea Citrus. The enhancers will be sold next to Nestle’s brands of water34.

SWOT ANALYSIS:
STRENGTHS :
• PepsiCo merged with Pepsi Bottling Group and PepsiAmericas to streamline management,
consolidate manufacturing, increase efficiencies, and reduce costs. Beverage Marketing Corp.
Beverage Marketing Corp.
• PepsiCo increases sales in 2012 and provides healthier beverages from acquiring OAO Wimm-
BillDann, a Russian dairy company.
• Net income exceeded expectations by rising to $1.31 per share instead of the expected $1.19
per share.
• Brands Pepsi Cola, Mountain Dew and Diet Pepsi have a significant share of the carbonated
beverage market.
• Gatorade brand of energy drinks top the list of the Top 20 U.S. Sports Drinks in 2012. Sales of
Gatorade increased 33.6% as consumers are more health-conscious6.
• Tropicana Pure Premium brand of fruit drink tops the list of Top 10 Refrigerated Orange Juice
with $1,035.2 million in 2012, much more than any other orange juice6.
• Mountain Dew sales increased by 0.6% after falling 1.5% in 2011. Mountain Dew Code Red
increased sales by 15.0% in 2012.
• Reduced the weight of packaging by 350 million pounds and decreased the amount of water
used in operations by 20% over the past five years.
WEAKNESSES:
• Profit decreases by 5% in 2012 due to higher costs of commodities, even though efficiencies
reduced costs by a goal of $1.5 billion15,18.
• PepsiCo cut 3% of its global work force in an effort to structure its sluggish business.
• PepsiCo hasn’t pursued a market penetration strategy of its major brands, and those brands
have lost market share to competitors like Coca-Cola.
• Overall volume decreased by 3.5% in North and South America and was flat in Europe.
• Investors are pressuring PepsiCo to break their beverage and snack businesses apart.
OPPORTUNITIES:
• Remind consumers of key brands Pepsi Cola, Mountain Dew, Gatorade, Tropicana, and Lipton
by advertising during the Super Bowl.
• Develop a Global Nutrition Group and a portfolio of nutritional drinks to address obesity and
wellness concerns.
• PepsiNEXT successfully launched in 2012 for $100 million in sales in the first year.
• Discount and dollar stores are replacing more traditional local stores, and PepsiCo partnered
with Family Dollar in 2012 to sell brands Pepsi, Aquafina, Lipton, and others.
• Social media allows PepsiCo to directly market itself and respond to critics and unhappy
customers.
• Open research and development centers in China, Germany, and Mexico to reduce packaging
and develop sweeteners and formulas that give a lot of taste without at lot of calories6.
THREATS:
• Diet Coke displaced Pepsi Cola in 2011 and it continues to fall by 3.4% in 2012.
• Caffeine Free Diet Pepsi last 15.8% in sales from 2012.
• Consumers are shying away from the empty calories of sugar-heavy drinks, like carbonated
beverage and fruit product lines.
• Commodity prices are inherently unstable due to weather, government and regulatory
concerns.
• Public opinion pressures companies to use less energy and resources in the manufacture,
distribution, and disposal of their products.
• People are concerned about the physiological effects of energy drinks, dampening sales.

• Governments want and require foods and beverages to be traced during the entire
manufacture, distribution, and sales of a product.
• A lawsuit stopped PepsiCo from labeling Naked juices as “all natural” and hurt the healthy
image of the brand.

NEW PRODUCT DESCRIPTION :

PRODUCT DESCRIPTION:
The new product is Aquafina FlavorSplash Travel Package of value-added waters with four
tropical flavors: Orange Tangerine, Pineapple Mango, Strawberry Kiwi, and Blue Raspberry. It
extends the Aquafina FlavorSplash line of PepsiCo. Each package contains eight or twelve
BPAfree, 12-fluid-ounce bottles bounded in plastic wrap. There are two or four bottles of each
flavor, depending on the total number of bottles. The bottles are clear, compact and taper in
the middle to grip easily. The top and bottom of the bottles clearly show the liquid inside. White
caps top each bottle. Both the bounding plastic wrap and the middle wrap of each bottle
display the product name and information. The wraps show bright, saturated, colors, cartoons,
and hand-drawn typefaces. Each flavor has a distinct cartoon that fits within the overall style.
PRODUCT FEATURES AND BENEFITS :
The Aquafina FlavorSplash Travel Package combines the best of juice and waters in a single
product. It has flavors and vitamins of juice and energy drinks without the calories, sugars, and
caffeine. It is filtered water, citric acid, sodium hexametaphosphate (to keep flavor), potassium
citrate, potassium sorbate (to keep fresh taste), stevia (sweetener), acesulfame potassium
(sweetener), calcium disodium EDTA (to keep flavor), phosphoric acid, natural flavors, and
colors. It also contains the following daily values of vitamins: 3% sodium, 1% potassium, 100%
vitamin C, 20% pantothenic acid, 20% niacin, and 20% vitamin B6. The ingredient list has many
positive effects. It helps people stay hydrated and healthy without the calories, fat,
carbohydrates, brominated vegetable oil, alcohol, or caffeine of other drinks. The amount of
sodium is much lower than juice or carbonated beverages. Stevia sweetens the fruit flavors
instead of sugar and troublesome sweeteners. Each component is relatively inexpensive as
opposed to ingredients like coconut water. It also looks more appealing that cloudy coconut
water or concentrate separating juice.
PRODUCT UNIQUENESS:
PepsiCo and many competitors do not have variety packs of exotic flavored water. Variety
packs are usually seen in dry goods and some juices, but not in bottled waters and most other
beverages. Aquafina has many separate flavors in the FlavorSplash product line, but the flavors
are not packaged together. The bottles also tend to be large and more difficult for kids to carry
on their activities. The newest flavors are fruit blends, as in the recent release of sparkling
FlavorSplash water. The other water brands are focused on adult consumption and include
caffeine. HyVee does carry a similar package of plain water with added fluoride for kids, but the
water isn’t flavored and doesn’t have vitamins.
PRODUCTION PROCESS DESCRIPTION:
Bottles and packaging are produced by Pepsi Bottling Ventures, a privately-held bottler with 22
bottling and distribution locations in the south eastern United States. Graphic design and
product information are provided by PepsiCo Americas. Water from public systems is processed
in Aquafina’s HydRO-7 ™ purification system. The water is mixed, filtered twice for large and
small particles, exposed to UV light to kill organisms, processed in reverse osmosis to take out
more solids, ran through an activated carbon filter and related polishing water, and exposed to
ozone to clean up the last of the particles. Ingredients can be found at a wide variety of
suppliers in the United States. Citric acid is produced by ADM, AIDP Inc., Cargill, Cargill Corn
Milling, FBC Industries Inc., Junbunzlauer Inc., Tate & Lyle, and The Wright Group. The
phosphorous emulsifier sodium hexametaphosphate is produced by BASF Corp., FBC Industries
Inc., Frutarom USA Inc., and The Wright Group. Potassium sorbate is produced by FBC
Industries Inc. and The Wright Group. The sweetener acesulfame potassium is produced by
Dulcette Technologies LLC, Pocantico Resources Inc., and U.S. Niutang Chemical Inc. Calcium
disodium is produced by AIDP Inc., Fortitech Inc., Glanbia Nutritionals, Innophos Inc.,
Jungbunzlauer Inc., Leprino Foods Co., Purac, Specialty Minerals Inc., and The Wright Group.
Stevia is a plant found in tropical and subtropical regions of North and South America. It is a
stable source within the United States. It is produced by AIDP Inc., Cargill Corn Milling,
Pocantico Resources Inc., PureCircle, Steviva Ingredients, and U.S. Niutang Chemical Inc.
Phosphoric acid is produced at Fortitech Inc. and The Wright Group. Flavors are produced at
Allen Flavors Inc., Whittle & Mutch Inc., WILD Flavors Inc., and The Wright Group. Colors are
produced by Allen Flavors Inc. and Food Ingredient Solutions LLC. Vitamins and minerals are
produced by ADM, BASF Corp., and The Wright Group.
WARRANTIES AND GUARANTEES:
Aquafina FlavorSplash Travel Package gives customers a healthy and easy alternative to
drinking unhealthy beverages on long trips and during long activities. This healthy beverage will
hydrate you and your family without the added costs and calories of traditional beverages.

TARGET MARKETS:
SEGMENTATION BASIS:
Target markets are segmented based on demographics, psychographics, benefit, and behavior.
Demographics are characteristics of a population, like age, gender, ethnicity, household status,
generations, income, and other aspects. Psychographic segmentation includes how customers
view themselves, their values, and their lifestyle. Benefit segmentation includes the needs and
wants of consumers. Behavioral segmentation includes occasion and loyalty.
TARGET CUSTOMERS AND CHARACTERISTICS:
Demographically, the target customers are children and caregivers of children, such as parents,
grandparents, family members, and legal custodians. This often refers to families of two to
three people, with at least one child and one parent. Children are most likely Generation Z, ages
0-17, and possibly Generation Y, ages 18-36. Both generations have much in common, such as a
fondness for nostalgia and retro products and heavy use of social media. Parents are more
likely to be in Generation Y or Generation X, ages 37-48. Generation Y is more comfortable with
new technology like social media. Generation Y loves to shop, but Generation X is more likely to
be skeptical of marketing claims. Their incomes are low to middle and they do not have a great
deal of funds to spend on beverages. Many healthy items are also more costly, and these
markets also balance health with the limits of their budgets. Premium products and ingredients,
like coconut water, often have a lower value than lower-cost items that solve the basic
problems of consumers. These consumers do not often see water as a luxury item.
Psychographically parents are more likely to be health-conscious. The growing focus on
nutrition and health steers them away from high-calorie carbonated beverages and juices and
ingredients with poor effects. Children are more likely to want bright and sweet drinks without
much thought to health. They are more likely to use social media than their parents. Social
media and internet access provides a wealth of information on products, ingredients, and the
latest news on health concerns. Health concerns are likely to be more interesting to children as
they age, and they will have much better access to product reviews. Behaviorally, both
segments are likely to be very busy. People often have road trips, long activities, and busy days.
Focus on nutrition often takes a back seat to convenience during these times. Lastly, the
markets benefit from satisfying their thirst.
POSITIONING STRATEGY:
Consumers should view Aquafina FlavorSplash travel packs as the healthy way to hydrate you
and your family in the midst of your busy life. The basic value proposition is that they don’t
have to choose between health, convenience, and money. The marketing mix should be
concentrated on this target market.
COMPETITIVE STRATEGY:
The new product launch is part of an overall product development strategy by PepsiCo. It is in
line with the current Aquafina FlavorSplash product line. For example, it fits in with the most
recent release of sparkling waters for teens. The new product formula and marketing
differentiates it from competitor waters. Only PepsiCo markets water to teens, and very few
market value-added water to families. Coca-Cola has Glauceau vitaminwater, but it has many
more calories and sugar. Dr Pepper Snapple Group has unflavored Deja Blue brand. Their
Penafiel brand has plain water and high-calorie sodas. Cott Corporation has So-Clear sparkling
and Chadwick Bay waters that are flavored and carbonated. National Beverage has LaCROIX,
ClearFruit, Crystal Bay, and Cascadia Sparkling Clear has similarly flavored and carbonated
water. It also competes indirectly with juices. Overall, juices have stumbled with their image as
sugary and pseudo-healthy.

MARKETING OBJECTIVES:
MARKETING OBJECTIVES :
• PepsiCo will acquire 25 million customers during the first year of the product launch.
• PepsiCo will retain 6.25 million customers during the first and second years of the product
launch.
• PepsiCo will maintain and develop its relationship with Pepsi Bottling Ventures and key
suppliers.
• PepsiCo will maintain an 80% customer satisfaction rate during the first year of the product
launch according to PepsiCo’s customer surveys.
• PepsiCo will gain new 10,000 followers on FaceBook, 300 new followers on Twitter, and 1200
new followers on Instagram within the first year of the product launch. The FlavorSplash line
currently has 18,668 followers on FaceBook, 329 followers on Twitter, and 1353 followers on
Instagram.
FINANCIAL OBJECTIVES:
• PepsiCo will sell $90 million in sales during the first year of the product launch. PepsiMax, a
recent related new product, sold $100 million in its first year.
• PepsiCo will sell 40 million gallons in volume during the first year of the product launch.
PepsiMax, a recent related new product, sold 50 million gallons in volume in its first year.
• PepsiCo will acquire 5% of the market during the first year of the product launch and the new
product will acquire 4% of PepsiCo’s water portfolio. PepsiMax, a recent related new product,
maintained 1.5% of PepsiCo’s larger carbonated soft drink portfolio.
• PepsiCo will maintain a margin of 10% for every product sold.
• PepsiCo will a 70% return on investment to balance sales revenue against the cost of
advertising.

KEYS TO SUCCESS:
CORE COMPETENCIES:
PepsiCo has a solid reputation as a leading beverage provider of multiple billion-dollar brands,
including Aquafina. It can successfully extent the FlavorSplash product line without diluting the
brand. It has a solid relationship with Pepsi Bottling Ventures to develop and bring the new
product directly to stores. The company’s commitment to wellness beverages and willingness
to develop new ideas and research will help the new product succeed. Aquafina FlavorSplash
Travel Package fits well within PepsiCo’s commitment to innovative, convenient, responsible
products. The travel pack gives busy customers a healthy and easy alternative to drinking
traditional beverages. Water is a high-growth space in the beverage industry. The newer
sweetener stevia is part of PepsiCo’s innovative efforts to sweeten beverage without adding
unnecessary sugars.

STRATEGIES:
PRODUCT :
The FlavorSplash Travel Package falls under the individual brand of Aquafina within the larger
umbrella of PepsiCo products. Also, it extends the FlavorSplash product line as a four tropical
flavors: Orange Tangerine, Pineapple Mango, Strawberry Kiwi, and Blue Raspberry. New
products benefit by using existing brands, rather than new individual brands or product lines.
PepsiCo generates $896 million and 3.6% growth in sales in 2012 with the Aquafina brand. The
company can use fewer resources on increasing consumer brand awareness due to the strength
of this brand. It fits well without diluting the FlavorSplash line or stealing sales from other
Aquafina products. The following steps develop the new product: test the new concept with a
potential set of customers, develop product prototypes, test the product in representative
markets, launch the product, and evaluate the results. Focus groups and in-depth interviews
test the new concept is tested with focus groups and, and then internet and mall surveys follow
up. Manufacturers and designers develop and test prototypes in two stages at their research
and development centers: alpha and beta. Manufacturers, designers, engineers, and marketers
develop the whole product: bottle form, water composition, wrapping, etc. PepsiCo conducts
alpha testing with employees. Beta testing uses target consumers in virtual reality settings, such
as a convenience store with printed products on shelves. Researchers track consumer behavior,
such as eye movement, and weighed it against the perceptions of consumers collected in
surveys. Next, Nielsen BASES tests the product with samples and limited launches in four
representative test markets. In Nielsen BASES testing, each consumer receives the new product,
uses it for two weeks, and then returns a survey on the function and desirability product. Then
products launch in Austin, TX, Grand Junction, CO, Cedar Rapids, IA, and Escondido, CA a period
of one month. PepsiCo evaluates and changes the marketing mix and product before the full
product launch. The FlavorSplash Travel Package has primary and secondary packaging. Unlike
other waters, children and parents are the target markets. Packaging has bright and fun colors
and cartoons not typically used on current water packaging. The transparent wrap shows the
flavored waters as much as possible. Each flavor will have its own design within the same style.
The Food and Drug Administration (FDA) reviews and approves nutritional information and
formulas.

PROMOTION:
Traditional media, web-based media, sales promotions, personal selling, and public relations -
compose the marketing mix. Public relations announce the product launch with a press release
on PepsiCo’s main website. It also monitors and maintains the perception of the new product
outside of the company. Traditional media advertises primarily on television, then radio and
print in consumer and trade publications. Television advertisements play most during Saturday
mornings and primetime evening hours, less during the day, and rarely at night. Radio
advertisements play most during the hours 6-9am and 4-7pm, less during 9am-4pm, and even
less at night. Print advertisements feature more in trade publications (Beverage Business
Insights, BevNET Magazine) than in consumer publications (People, Seventeen). Web-based
media includes Aquafina’s website, YouTube, game applications, and unique Facebook, Twitter,
and Instagram pages. Both in-house designers and advertising agencies create the
advertisements. Also, they hire actors through unions for television, YouTube, and radio
commercials. PepsiCo continues and establishes advertising contracts with major broadcast and
cable stations, such as ABC, CBS, NBC, Comedy Central, Discovery, and MTV, radio station
owners, such as Cumulus and Clear Channel, and major websites like CNN and MSNBC.
Promotions collect key customer data, and advertising agencies modify them as needed. Sales
promotions include contests, point-of-purchase displays, and coupons. Advertising agency Offer
Pop runs contests through Facebook and Twitter to win vacations with a complete supply of the
new product. Other contests include signing up and answering small surveys each week to win
small prizes and free samples. Point-of-purchase displays sit in stacks close to the cash registers
and at the front entrances of retailers. Retailer web and print advertisements include coupons
and check-ins on social media. These also collect key customer data, and advertising agencies
modify them as needed. Personal selling builds business-to-business relationships. Personal
calls, in-person meetings, and teleconferenced meetings strengthen relationships and keeps all
business partners informed of progress. Beverage industry trade shows provide excellent
opportunities. At exhibit booths, retailers view and sample the new product in hopes of
carrying the new item. PepsiCo also gives special displays to retailers to highlight the launch.
PLACEMENT:
PepsiCo has and develops strong relationships and supply chains between suppliers, Pepsi
Bottling Ventures, and stores. Pepsi Bottling Ventures uniquely provides a corporate vertical
chain to manufactures, sells, and distributes products to stores. It allows PepsiCo to focus on
key ingredient suppliers and retailers. The company has contracts with major department
stores, such as Walmart and Target, convenience stores, grocery chains, and restaurants, such
as Culvers, Arbys, and Long John Silvers. Fast-food chains provide both bottled and fountain
beverages. Also, self-serve fountains at restaurants collect customer data.
PRICE:
Pricing communicates affordability and quality of Aquafina FlavorSplash Travel Package.
PepsiCo initially uses a market penetration price strategy and then an everyday low price
strategy. The company offers introductory price promotions of $3.10 per package of eight and
$3.75 per package of twelve to retailers. The introductory retail price is $3.50 per package of
eight and $4.25 per package of twelve, and the regular MSRP is $3.99 per package of eight and
$4.50 for packages of twelve. The lower price may boost sales of the new product. PepsiCo
offers slotting allowances, advertising allowances, and quantity discounts to retailers. Slotting
allowances ensure placement in store aisles and point-of-sale locations complete with store
displays to increase awareness of the product during the launch. Quantity discounts to retailers
may lead to greater sales volume. If the volume sold steadily increases, marginal cost in
production decreases. Economics of scale make production cheaper, bringing the price low
enough to maintain profit and undercut competitors. After six months, the pricing strategy
switches to an everyday low price. Seasonal discounts and coupons can also help generate sales
and keep customers looking for new products.

EVALUATION:
 PepsiCo measures success by internally and externally evaluating traditional and web-based
media within the first year of the launch. Gross rating points (GRP) measures radio, television,
and print by multiplying frequency of views and reach of a particular media. Each radio station,
television program, and others can be evaluated for efficacy. Target markets receive surveys
and the larger public can fill out online surveys for immediate feedback. Internal marketing
department and advertising agency OfferPop measure web-based media. Both use the web
service of Google Analytics to track unique and repeat views of websites, frequency of visits,
impressions, and click-through rates. Other services analyze Facebook, Twitter, and Instagram
to check the number of people signing up for contests, liking content on Facebook, posting
pictures, video, and text to all promotional channels. OfferPop provides progress reports on
campaigns as they unfold. Internal finance departments, retailers, manufacturers, and trade
and organizations gather and verify sales information. Retailers and manufacturers report on
sales, volume, margin, and return-on-investment of the new product. Trade publications and
organizations, such as Beverage World, provide the market share of PepsiCo and competitors in
articles and their annual State of the Market report.

CONCLUSION:
In conclusion, Aquafina FlavorSplash Travel Package fits well within the Aquafina brand of
PepsiCo. PepsiCo, OfferPop, Pepsi Bottling Ventures, and retailers will successfully implement
the strong marketing mix of product, promotion, place, and pricing. Consumers increasingly ask
for innovative, convenient, and healthy alternatives to traditional carbonated beverages, and
Aquafina FlavorSplash Travel Package is the perfect solution for families and children.

PepsiCo’s Strengths (Internal Strategic Factors)

PepsiCo suffers from a number of weaknesses that act as barriers to international
growth. The internal strategic factors that limit organizational development are
considered in this aspect of the SWOT analysis framework. The following are PepsiCo’s
main weaknesses:

1. Low penetration outside the Americas

2. Limited business portfolio
3. Weak marketing to health-conscious consumers

PepsiCo derives about 70% of its revenues from markets in North America and South
America. This weakness indicates that the company has not yet maximized potential
revenues outside the Americas. In addition, PepsiCo operates primarily in the food and
beverage industry. This is a weakness because it maximizes the company’s
vulnerability to risks in the food-and-beverage market. Also, PepsiCo fails to effectively
market many of its products to health-conscious consumers. This aspect of the SWOT
analysis highlights weaknesses that PepsiCo must address through changes in its
growth strategy.
 Opportunities for PepsiCo (External Strategic Factors):
PepsiCo has opportunities for continued global growth. In this aspect of the SWOT
analysis framework, external strategic factors that provide options for business
improvement are identified. PepsiCo’s opportunities are as follows:

1. Business diversification
2. Market penetration in developing countries
3. Global alliances with complementary businesses

PepsiCo has the opportunity to diversify its businesses, such as by acquiring a

complementary firm that is not in the food and beverage industry. Another opportunity is
for PepsiCo to increase its penetration in developing countries to generate more
revenues from markets outside the Americas. In addition, PepsiCo can create alliances
with complementary business to increase its market presence. Based on this aspect of
the SWOT analysis, PepsiCo has significant opportunities to strengthen its business
resilience.

Threats Facing PepsiCo (External Strategic Factors)

The food and beverage industry experiences a variety of threats. External strategic
factors that could reduce business performance are considered in this aspect of the
SWOT analysis framework. In PepsiCo’s case, the following are the most significant
threats:

1. Aggressive competition
2. Healthy lifestyles trend
3. Environmentalism

Aggressive competition is a major threat against the company. The influence of the
Coca-Cola Company is especially significant against PepsiCo. In addition, the healthy
lifestyles trend is a threat against PepsiCo’s products, many of which are seen as
unhealthful because of their sugar, salt, or fat content. Also, environmentalism threatens
the company in how consumers negatively respond to product waste and lifecycle
issues. This aspect of the SWOT analysis indicates that PepsiCo must reform its
strategies to overcome the threats to business.

Recommendation
There are many things that PepsiCo is doing well at and should consider doing in the future. On
the other hand, there are multiple things that PepsiCo could work on and improve in the future.
One thing that PepsiCo does well and should continue doing in the future is making wise
decisions about mergers and acquisitions. In order to continue to grow their business, PepsiCo
should continue to make successful mergers and acquisitions of beverage, bottling, and snack
companies. In addition, 22 brands that PepsiCo owns are currently earning more than $1 billion
a year. This means that PepsiCo does not have to rely on a couple brands to generate a lot of
revenue. Instead, PepsiCo has many brands that help contribute to the overall income of the
company. Lastly, PepsiCo has spent a large amount of money on marketing and advertising
campaigns. These campaigns have been successful and resulted in growing market share over
the company's competitors.  

PepsiCo could improve their dependence on Wal-Mart. Currently, over 13% of their revenues
are generated by sales in the Wal-Mart stores. Because of this, Wal-Mart can easily demand
certain prices which leave PepsiCo with small profit margins. Going forward, I think that
PepsiCo should decrease their dependence on Wal-Mart by placing more products in other
stores that compete with Wal-Mart. Another improvement PepsiCo could make is their pricing
decisions. Compared to competitors, PepsiCo's prices are usually lower. Low prices translate to
low quality products to customers. In the future, PepsiCo should raise their prices to match
their competitors. This will help to eliminate a view from customers of low quality products.
Lastly, PepsiCo could improve some of their practices that are seen as questionable to the
public. Recently, PepsiCo was found to be using tap water in their bottled waters and selling the
product to customers who believed the water was from mountain springs. PepsiCo should
improve their questionable practices by eliminating the use of deceptive marketing and being
more transparent to consumers. 

Looking to the future, PepsiCo has many opportunities to improve themselves. The first growth
opportunity is found in the emerging markets where the beverage and snack consumption is
rapidly growing. If PepsiCo can successfully invest in these emerging markets, it could increase
their revenues and market share drastically. This will also help them rely less on sales in the
United States. A second growth opportunity is found in the increase of consumer demand for
healthier food and beverage options. If PepsiCo expands more into these product categories,
they could drastically increase their sales. In order to do this, they will have to produce food
and drinks with lower amounts of sugar and calories.

In conclusion, I recommend that PepsiCo continue to make wise decisions about mergers and
acquisitions, successfully operate the brands they currently own, and create effective marketing
campaigns. I recommend PepsiCo reduce their dependence on Wal-Mart, increase their prices,
and clean-up some of their questionable business practices. Lastly, I recommend PepsiCo take
advantage of the emerging markets and healthier consumer preferences.